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What is NFT and is there a future for it?

What is NFT and is there a future for it?

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Blockchain is more frequently permeating into other areas of our lives, which in the recent months is most vividly exemplified by NFT tokens. Contrary to the opinions expressed by its sceptics, it is not only an example of a technological extravagance. These can even serve art, or entertainment in the broad sense of the word, or business. 

NFT (which stands for Non-Fungible Token) is a unique digital element of assets which has no analogical equivalent. Thanks to the fact that it is impossible to duplicate, the token has been used as a proof of authenticity.  

NFT tokens – where did it start?

The forerunner for NFT was Quantum, a token created by Kevin McCoy and Anil Dash in May 2014. The token included video footage made by McCoy’s wife. They originally called the technology as „monetized graphics”.  

However, it is Etheria, launched and presented during the Ethereum developer’s conference called Devcon 1 in London, that can be considered the first official project of this type. What is interesting is the fact that the conference was held in October 2015 so 3 months after the Ethereum blockchain was launched. The greater majority of the 457 Etheria tiles went unsold for over 5 years. This changed on 13 March 2021 with a significant rise of interest in this solution. The total sale amounted to 1.4 million dollars. 

The term NFT itself only gained acceptance once the ERC-721 standard was proposed in 2017 through GitHub, a hosting platform.

Why are NFT tokens gaining popularity recently?  

There are two specific reasons why NFT has become so popular in the recent times. The first one is related to the question of authenticity. Standardizing the technology has led to all tokens being clearly identifiable and authentic.  Subsequently, it is impossible either to duplicate or copy any of them, thanks to which the risk of a potential fraud is decreased. 

The second relates to the issue of exclusiveness.  It is especially important from the point of view of collectors who value the rare nature of a given item. Owning such an item gives them extraordinary satisfaction. 

In what way are NFT tokens unique?

Just as in the case of Bitcoin, transactions carried with NFT also include data related to ownership in order to more easily identify and transfer tokens between their owners. They can also add metadata or some specific attributes. 

NFT can only be owned by one owner at a time. The unique specifications of a token make the verification of its owners and transferring its value to other owners immeasurably easy. Nonetheless, both the owner and the creator of a given NFT have the option to store some specific information in them. For example, visual artists can sign their works by including their signature in the NFT’s metadata.

NFT evolved from the ERC-721 standard. The standard defines how the minimum interface along with the metadata should look like. Next, it was updated to the ERC-1155 standard, which lowered the costs of transactions and storing and grouped many kinds of non-fungible tokens within one contract. 

As far as the safety of use is concerned, due to the distributed nature of blockchains, the NFT is extremely difficult to hack. Losing access to a given token, when the platform which serves to enable operations with it is suspended, can be a big threat.

What can constitute a NFT token?

Non-fungible tokens can be a digital representation of any resource, including the ones accessible only online, such as digital works of art or real assets in the form of real estate. We may also mention here computer games’ avatars, digital collectibles, names of domains or tickets for cultural or sports events. 

However, by its nature NFT does not grant copyright nor intellectual property rights to the digital resource which is being represented by the token. Even though anyone can sell the NFT that represents their work of art, the buyer will not necessarily obtain the copyright when the ownership of the NFT is exchanged. Hence, tokens are treated as proof of ownership other than copyright. 

What is the role NFT tokens can play in the future? 

NFT is a peculiar evolution of the concept of cryptocurrencies. Modern financial systems consist of complicated trading and lending systems for different types of assets, from loan agreements to examples of audiovisual works of art. While enabling a digital representation of physical resources, the NFT is a leap forward in discovering these infrastructures anew. 

Obviously, the idea is not new, similarly to the aspect of using unique identification. However, once those two concepts are combined with the benefits of manipulation resilient blockchain, they become a powerful drive towards change. 

Perhaps the most evident benefit drawn from the NFT is market efficiency. Transforming the physical resources into digital ones improves processes and eliminates the intermediaries. Tokens that represent works of art function without the participation of agents/patrons and make it possible for the artists to have direct contact with their recipients. The same also concerns business processes. Even in case of a bottle of wine the NFT will enable different participants in the supply chain to interact with it and will help trace its origin, production and sale throughout the process. 

We are also talking about an effective tool for managing identity here. It is enough to mention the physical passports. Converting them into NFTs with unique identification features will make it possible to improve the process of entering or leaving from specific jurisdictions. Moving forward, the NFT will contribute to a more precise verification of identity in the digital sphere. 

The NFT token can also democratize investing through fractioning such physical assets as real estate. It is much easier to divide a digital resource representing real estate among many owners than the physical one. And this tokenization ethics does not have to be limited to real estate only; it can be expanded to other resources, like graphics. Hence, a painting does not always have to have one owner. Its digital counterpart can be owned by many owners and each one of them is responsible for a fraction of that painting. Such a system could increase its value and revenues. 

Nonetheless, the most exciting perspective for the NFT is the creation of new markets and new forms of investing. Let us consider some area of land divided into many lots, each part containing different features and different types of real estate. One of them may be located near the beach, another one in an entertainment complex, and yet another one serves as a residential area. Depending on their features each piece of land is unique and priced according to separate criteria. In other words, the real estate business, complicated when we talk about all the bureaucracy, can be ultimately simplified by including the right metadata. 

Exchange specific tokens – what makes them different?

ICO (Initial Coin Offering) is the equivalent of the Initial Public Offering (IPO) in the cryptocurrency industry. A company which wishes to raise money to create their new service, a new application or to increase their turnover on the exchange may launch an ICO as a way of obtaining funds. 

Once the investors who are interested in the offer buy the ‘shares’, they will receive an exchange specific NFT token issued by the company. It could have some functionality connected with the company’s product or service or simply represent ownership of a share in it. 

How can you make profit on exchange specific NFT tokens?

The initial public offerings of company shares raise money for the companies which enter the stock exchange and result in distributing the shares among investors. In case of ICOs cryptographic companies raise funds through the sale of NFT tokens. Both options assume an optimistic approach of the investors regardless of whether we talk about the company or the cryptocurrency. They decide to engage their funds based on a conviction that the value of assets will increase with time. 

By the same token, the participants of ICO venture a bet that the price of the currently developing token will drastically outgrow its initial value. 

The exchange specific KNG token – why is it worth investing in? 

Token KNG is functional in its nature and is used to settle transactions on Kanga Exchange. The token may be used for many services offered by Kanga as a cryptocurrency exchange.  To say the least, we could mention the exchange of cryptocurrencies in dedicated stationary exchange offices or the billing system facilitating companies to trade in cryptocurrencies. The fees for providing such services are charged in none other than our token.

It should be emphasized here that individuals wishing to use the exchange do not have to own any KNG beforehand. From the very beginning the project was aimed at ensuring ultimate liquidity of transferred funds and automation of the exchange process. All that for the purpose of making the use of digital money simpler than ever before.